Section 44ADA partnership firm and 44ADA for individual partners returns queries

456 views

Save Share

Shanthi

Junior Student

171 Points Posted on 06 September 2023

Sir/Madam

1) Gross receipts for partnership firm = Rs 60 Lakhs taking 50% under Section 44ADA profit = 30 Lakhs, So since section 44ADA is applied what other further deductions can apply for a partnership firm? The tax liability comes to about 9 lakhs. Can any further deductions can be applied?

2. There are 2 partners, They also want to apply using 44 ADA what should be the net profit shown in their respective income tax returns? or should they file NIL returns? Their profit share is 50% 50% as mentioned in the partnership deed?

Each partner has housing loan, school fees, lic, health insurance etc so how best to use this for deduction in the above scenario?

Thanks

Shanthi

Replies (2)

CA Aakarsh Jain

4330 Points Posted on 06 September 2023

Hi, I'll be happy to help you in this. Please check your inbox for details

Aashok Kumar Sharma

Finance/Compliance Consultant

75642 Points Posted on 08 November 2026

44ADA isn't available to firms (except general partnership firms):

• Sec 44ADA applies to an "assessee, being a resident... individual, Hindu undivided family or partnership firm, other than a limited liability partnership firm". So a (non-LLP) partnership firm engaged in a specified profession can use 44ADA. Rs 60 lakh gross receipts (within Rs 75 lakh if cash is 5% or less): income Rs 30 lakh (50%).

• Partner remuneration and interest: no deduction is allowed from presumptive income (Sec 44ADA(2) deems all deductions allowed). Partners' remuneration and interest are taxable in the partners' hands (Sec 28(v)), so it's effectively double taxed. Many firms therefore don't pay remuneration when using 44ADA.

• Partnership firms under 44AD also face the same rule (no deduction for remuneration from AY 2017-18).